‘Corporation failed to earn interest of Rs.33.40 lakh on the deposits’

Tiruchirapalli City Corporation violated government instructions on where funds recovered from the employees should be deposited. Also, it failed to earn interest of Rs. 33.40 lakh as a result of a delay in deposit, the Comptroller and Auditor-General of India (CAG) has said.

The corporation, said the CAG report on the local bodies for the year ended March 2012, deposited the funds recovered from the employees towards the Contributory Pension Scheme (CPS) in banks instead of depositing them in Treasury deposit.

Giving details, the report (Government of Tamil Nadu Report No.5 of 2013) said the new CPS was extended to the urban local bodies from April 1, 2003. Every month the employees’ contribution of 10 per cent of pay, grade pay, and dearness allowance along with the employer’s contribution at the same rate was to be remitted into Treasury Deposit account to be opened in the government treasury. The report was tabled in the recent session of the Assembly.

The report is based on a performance audit by the CAG on functioning of the corporation between May and December last year and covered transactions pertaining to the period 2009-10 to 2011-12.

The State government, the report said, had instructed the urban local bodies to send statement showing subscriptions recovered along with reconciliation certificate to be issued by the Treasury Officer to the Director of Local Fund Audit (DLFA). In turn, the DLFA is to audit the accounts of CPS and certify the credit of both subscription and matching contribution into the Treasury.

After instructions from government in June 2010 regarding assigning of specific head of accounts and maintenance of CPS account by opening a T-account in the Treasury, the Tiruchirappalli Municipal Council passed a resolution for implementing the instructions.

“Despite government orders and Council approval, the corporation had failed to comply with the mandatory procedure of opening the T-deposit in the sub-Treasury for depositing the CPS subscriptions and employer’s funds. Instead, funds collected were deposited in the bank account,” the report said.

The employees’ subscriptions recovered from September 2008 to May 2012 amounting to Rs. 4.15 crore was deposited in the bank account after a delay ranging between one and three years. Scrutiny of the records during the audit revealed, the report said, that the delay in depositing the matching contribution (Rs.4.15 crore) of the corporation during the same period resulted in local body failing to earn interest of Rs.33.40 lakh.

Eight subscribers from whom the subscription was recovered retired from service during 2008-12. “They were not paid terminal benefits ranging from Rs.8,000 to Rs.54,000 under CPS. [Further,] 23 subscribers who died in harness during the period were not paid the benefits ranging from Rs.2,700 to Rs.58,000 a person,” the report said.

Corporation response

In reply, the corporation said in spite of its efforts, the T-deposit account could not be opened. Hence, the amount was kept in bank account.

“Reply is not acceptable as the scheme introduced in 2003 is yet to become procedurally functional which had led to shortfall in earning of interest,” the CAG report said.